The survey by the Economist Intelligence Unit found that eight of the cities in the top ten are in Europe. Four are Scandinavian.

Reykjavik is in third place ahead of Osaka, Paris and Copenhagen. Paris is the only city in the top ten in the eurozone.

Japan and Switzerland both have two cities in the top ten.

Researchers looked at the cost of living for expatriate workers rather than locals. The survey is a guide for companies to calculate executive pay. The price of 160 items from corn flakes to cigarettes and transport to telephone line rental were vetted.

Oslo's ranking is down to the strength of Norway's currency, the krone. The good news for Norwegians is that their higher prices are both caused and mitigated by higher wages.

Tokyo's fall is the result of Japan's weak economy and lower prices.

Jon Copestake, the survey's editor, said: 'The big news is Tokyo being pushed off the top. A gradual weakening yen has been compounded by years of low inflation and deflation.

'And, as for Scandinavia, there has been strong economic growth here. In Norway in particular there is high consumer confidence, rampant investment and low interest rates.'

Telephone line rental differs from city to city. In Oslo it's £16.14 a month, in London £10.37. A cut and blow dry would cost £38.68 in Oslo and £37.34 in London.

If accommodation had been taken into account, London's notorious rents would have catapulted it up the table - it is three times more expensive to rent in London than in Oslo.

Rent is not included because firms often give staff a separate allowance and they pay relocation costs. The only other British city in the list of 128 is Manchester in 26th place.